Suzanimal
07-15-2017, 07:39 PM
Social Security on track for 'large, abrupt' cuts in 17 years unless Congress acts
The Social Security and Medicare trustees issued their 2017 annual report on Thursday, and it began with an alarm bell.
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,” the trustees wrote in the summary of the 268-page document. “The Trustees recommend that lawmakers take action sooner rather than later to address these shortfalls.”
The Trustees also projected the biggest increase in payouts in years—a 2.2% increase—which comes to an average of about $28 per person.
Insolvency is on track for 2028 for the disability fund and 2034 for seniors. Insolvent, however, does not mean empty; it means that the funds would not be able to completely fulfill its debts to the public. It’s not as bad as a $0 check sent to American seniors, but the stakes are still high.
As the Committee for a Responsible Federal Budget, a non-partisan group dedicated to balancing the budget, noted in a paper on Friday, the cuts would be “large” and “abrupt” and growing from 23% in 2034 to 27% in 2091. The late-century date may prove reassuring to some, but a 23% cut takes the average Social Security benefit payout from around $1,400 to $1,080. This would be a significant blow.
...
Lawmakers have proposed changing how benefits are calculated, raising the payroll tax slightly, or subjecting all wages to payroll taxes (right now, wages up to $127,200 get taxed for Social Security). The CRFB has a tool that lets people model the Social Security fund to see how different policy solutions would keep the program solvent.
For example, raising the payroll tax 0.7% and subjecting all wages to payroll tax would keep the program solvent for another 75 years. However, it would still be on a road to running out.
On the benefit-cutting side, slowing benefit growth for the top 70% of earners, increasing the retirement age, and modifying cost-of-living adjustments would close the funding gap, but also not permanently.
https://www.yahoo.com/news/social-security-track-large-abrupt-cuts-17-years-unless-congress-acts-175058898.html
The Social Security and Medicare trustees issued their 2017 annual report on Thursday, and it began with an alarm bell.
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,” the trustees wrote in the summary of the 268-page document. “The Trustees recommend that lawmakers take action sooner rather than later to address these shortfalls.”
The Trustees also projected the biggest increase in payouts in years—a 2.2% increase—which comes to an average of about $28 per person.
Insolvency is on track for 2028 for the disability fund and 2034 for seniors. Insolvent, however, does not mean empty; it means that the funds would not be able to completely fulfill its debts to the public. It’s not as bad as a $0 check sent to American seniors, but the stakes are still high.
As the Committee for a Responsible Federal Budget, a non-partisan group dedicated to balancing the budget, noted in a paper on Friday, the cuts would be “large” and “abrupt” and growing from 23% in 2034 to 27% in 2091. The late-century date may prove reassuring to some, but a 23% cut takes the average Social Security benefit payout from around $1,400 to $1,080. This would be a significant blow.
...
Lawmakers have proposed changing how benefits are calculated, raising the payroll tax slightly, or subjecting all wages to payroll taxes (right now, wages up to $127,200 get taxed for Social Security). The CRFB has a tool that lets people model the Social Security fund to see how different policy solutions would keep the program solvent.
For example, raising the payroll tax 0.7% and subjecting all wages to payroll tax would keep the program solvent for another 75 years. However, it would still be on a road to running out.
On the benefit-cutting side, slowing benefit growth for the top 70% of earners, increasing the retirement age, and modifying cost-of-living adjustments would close the funding gap, but also not permanently.
https://www.yahoo.com/news/social-security-track-large-abrupt-cuts-17-years-unless-congress-acts-175058898.html